Implement Bold Policies To Spur Growth
– World Bank urges developing countries
Story: Isaac AIDOO, Accra
As global uncertainties persist, Deputy Chief Economist and Director of the Prospects Group at the World Bank, M. Ayhan Kose has called on developing economies, including Ghana, to implement bold and transformative policies aimed at fostering cross-border cooperation and sustainable growth.
His remarks came during the launch of the World Bank’s latest Global Economic Prospects report, which outlines both challenges and opportunities for these economies in the years ahead.
The Call for Strategic Reforms
“In a world shaped by policy uncertainty and trade tensions, developing economies will need bold and far-reaching policies to seize untapped opportunities for cross-border cooperation,” Kose emphasized. He highlighted three critical areas:
- Strategic Trade Partnerships: Developing nations should prioritize partnerships with other rapidly growing economies to diversify trade and reduce dependency on advanced economies.
- Infrastructure Modernization: Upgrading transportation networks and standardizing customs processes could significantly reduce trade inefficiencies, boost competitiveness, and attract investment.
- Sound Macroeconomic Policies: Strengthening fiscal and monetary policies will bolster these nations’ ability to withstand global economic fluctuations and attract long-term investment.
A Challenging Global Landscape
The report paints a sobering picture for developing economies, projecting that they will finish the first quarter of the 21st century with their weakest long-term growth outlook since 2000. Growth in these economies is expected to stabilize at about 4% over the next two years—lower than pre-pandemic levels.
Persistent global headwinds compound the challenges. Rising trade restrictions, policy uncertainty, and persistent inflation threaten to constrain investor confidence and financing flows. High global interest rates, combined with slower-than-anticipated growth in advanced economies, could further exacerbate the situation.
Yet, the report also identifies potential bright spots. If China implements additional stimulus measures and the United States sustains robust household spending, these developments could drive stronger-than-expected global growth, creating spillover benefits for developing nations like Ghana.
Long-Term Trends and Opportunities
Developing economies are at a crossroads. While their share of global GDP has increased from 25% in 2000 to 45% today, progress in closing the income gap with advanced economies has slowed. Since 2014, excluding China and India, the average per capita income growth in these economies has lagged behind that of wealthy nations, widening the disparity.
However, the report emphasizes that the right policies can help reverse this trend. Developing economies are uniquely positioned to lead global efforts in areas like climate action and human capital development. Addressing infrastructure deficits, accelerating the transition to renewable energy, and investing in education and skills training are key measures that can spur growth while aligning with broader climate and development goals.
The Importance of Regional Collaboration
Kose’s remarks underscore the growing importance of regional and South-South cooperation. Developing economies now send more than 40% of their goods exports to other developing nations—double the share in 2000. This trend highlights the potential for regional trade agreements, such as the African Continental Free Trade Area (AfCFTA), to drive economic growth and resilience.
Ghana, as a hub for AfCFTA, stands to benefit significantly from enhanced regional trade. By adopting the World Bank’s recommendations, such as modernizing customs procedures and improving infrastructure, Ghana could position itself as a leader in intra-African trade.
Moreover, developing economies have become critical players in global financial flows. Between 2019 and 2023, they accounted for 40% of global remittances, up from 30% in the early 2000s. These financial inflows, alongside development assistance and investments from fellow developing nations, present a powerful opportunity for growth.
Navigating a Complex Future
Indermit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank, stressed the need for innovative strategies. “The next 25 years will be a tougher slog for developing economies than the last 25,” he said. Gill called for a “new playbook” that emphasizes domestic reforms to attract private investment, deepen trade relationships, and optimize the use of resources.
Despite the daunting outlook, Kose remains optimistic about the potential for transformation. He urged countries like Ghana to view current challenges as opportunities to innovate and lead. “The future depends on the choices made today,” he said.
A Blueprint for Ghana and Beyond
Ghana, grappling with debt pressures and infrastructure challenges, can draw valuable lessons from the report. By leveraging its strategic position in Africa and pursuing bold reforms, the country could harness the benefits of increased trade, investment, and regional cooperation.
The report also advocates for multilateral efforts to strengthen global trade governance, a move critical for reducing barriers and promoting inclusive growth. As Ghana navigates its economic recovery, the World Bank’s recommendations provide a timely roadmap for aligning national policies with global opportunities. Kose’s remarks serve as a rallying call for developing economies to act decisively in addressing their shared challenges. With strategic partnerships, infrastructure upgrades, and sound policies, countries like Ghana have the potential to not only overcome economic headwinds but also emerge as key players in shaping the global economic landscape of the future.
